Friday, August 29, 2014

We are glad to inform you that our Hidden Gem stock of April 14 - Flex Foods Ltd (BSE Code: 523672) has achieved its target price of Rs. 60 within short span of 4 months and yesterday closed at price of Rs. 60.2 giving absolute returns of 84% to our Hidden Gem members. Our team suggested Buy on Flex Foods Ltd at price of 32.50 on 28th Feb'14.
Company announced its quarterly results on 06 Aug'14, net profit of Flex Foods rose 102.38% to Rs 4.25 crore in the quarter ended June 2014 as against Rs 2.10 crore during the previous quarter ended June 2013. Sales rose 18.29% to Rs 17.66 crore in the quarter ended June 2014 as against Rs 14.93 crore during the previous quarter ended June 2013. We suggest our members to continue to hold Flex Foods Ltd in their portfolio.

Below is the summary of Flex Foods Ltd shared by our team under Hidden Gem stock recommendation - Apr'14

The
Company is engaged in the business of agro based value added food products
catering to the international markets mainly inEurope, USA, Canada & Australia.
The company started its commercial operations in 1992 by establishing an 100%
EOU for vacuum freeze dried vegetables mainly mushroom and culinary herbs
with a total processing capacity of 2000 MTs per annum.

FFLis in the business for last more
than one decade and has been selling its products mainly in US and European
market through it renowned and reputed distribution channels.

List
of countries where company export :

USA

North
America

Canada

Europe
(U K, Germany, Denmark, France, Belgium)

Australia

South
Africa

Middle
East countries

World class manufacturing facilities with"state-of-the-art"technology, GMP & Quality systems
makeFlex Foodsa leading company in the category.

The processing infrastructure includes the most modern plant equipments fromleading
technologyproviders
i.e. M/s NIROA/s , Denmark ; M/s NON, Holland; M/s BINDER, Germany &
EUROTEK, UK along with those from the leading Indian companies. The plant canprocess
upto 20000 MTsof
mushrooms, herbs, fruits & vegetables per annum in the form of freezedried,
frozen, IQF, air-dried and canned products. All the process steps starting from
the reciept of raw materials till final packaging of the product , areunder
strict quality environment & hygienic conditionsto achieve thehighest
level of microbiological & phytosanitary standards.

The facilities have been certified forKOSHER,Global
Standard for Food Safety(formely
British Retail Consortium(BRC)-issue 5th January 2005 at Grade-A) andHACCPcomplaince.

Flex Foodsoffers a wide range of VacuumFreeze Dried,Air-Dried Dried,FrozenandIQF(Individually
Quick Frozen) product range of mushrooms,herbs,spicesandfruits /
vegetables, meeting strict quality & hygiene standards.
Canned button mushroom in various shapes and sizes is also available as per the
customer requirement.

FFLis a single point source of supplier
of Frozen / IQF, Air Dried as well as Freeze Dried products to the customers as
per their requirements.

2. Saral Gyan
Recommendation (as on 28th Apr'14)

As Small cap index has seen a sharp rise of 14% in last 4
months and 20% since last 2 months, correction in stock prices with some
profit booking can not be ruled out. Hence, our team has ensured that the scrip
chosen as Hidden Gem - April'14 must have limited downside risk and offer
good safety in case of correction in stock market due to any negative surprises
post election.

Our team has followed
Walter Schloss principle's while finalizing Hidden Gem stock of the
month. Walter J. Schloss was a well-regarded value investor, as well
as a notable disciple of the Benjamin Graham school of investing.

The legendary Walter Schloss
checked the stock on the following 4 criteria to determine if the stock merits
a place in the portfolio:

• Zero or very low debt equity
ratio

• High Promoter holding

• Stock purchase price lower
than book value

• Dividend yield of at least 3%

FlexfoodsLtd satisfies all 4
criteria's and offer good safety with limited downside risk. 1. Debt to equity ratio of FlexFoods stands at 0.27,
promoters share holding in the company is 59%, stock is trading at 0.71 times
of its book value and company is paying dividend of Rs. 2 since last 6 years, which at current market
prices of Rs. 32.75 works out to an attractive dividend yield of 6.1% (tax free
on the hands of investors). This consistent dividend payouts makes the stock
attractive over bank fixed deposits for long term investors. 2. Company revenue
growth is merely 5.4% in last 5 years, however operating profit margins of the
company have improved to 22.2% in first 3 quarter of FY 2014 compared to OPM of
18%, 17.3% and 17.6% in FY 2013, FY 2012 and FY 2011 respectively. 3. Company
generates more than 60% of its revenue from exports and any depreciation of
rupee from current levels is expected to improve company's performance. 4. Moreover, FlexFoods is going through
expansion of its manufacturing facility with an investment of Rs. 12 crores and
hence we can expect better revenue growth with higher net profits in coming
years. Company
is trading at trailing PE ratio of 5 and considering increase in its
revenue from ongoing expansion, FlexFoods is a good
investment opportunity for long term investors. We
suggest you to invest in FlexFoodsLtd at CMP of Rs.
32.75 for a target of Rs. 60 over a period of 12 to 24 month.

Portfolio Allocation: 3% of your equity portfolio.

We would like to inform our readers that Hidden Gem - Aug'14 stock research report / recommendation is yet not published by our team and will be released on 31st Aug'14.

An opportunity missed an opportunity lost. Start building your equity portfolio by investing in Hidden Gems and Value Picks of stock market.The stocks we reveal through Hidden Gems (Unexplored Multibagger Small Cap Stocks) & Value Picks (Mid Caps with Plenty of Upside Potential) are companies that are either under-researched or not covered by other stock brokers and research firms. We keep on updating our subscribers on our past recommendation suggesting them whether to hold / buy or sell stocks on the basis of company's performance and future outlook.Subscribe to Hidden Gems & Value Picks and start investing systematically. Avail attractive discounts by subscribing to our combo packs, click here for details.

In case of any queries, simply write to us. We will be delighted to assist you!

Regards,

Team - Saral Gyan.

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